European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Norwegian Finans Holding - Nordax Bank: Let the Negotiations Begin

Norwegian Finans Holding (NOFI) – Quality Growth Business @ Affordable Valuations !!

Event-Driven

Norwegian Finans Holding ASA / Event-Driven

As mentioned in my previous insight <a href="https://www.smartkarma.com/insights/norwegian-finans-holding-nordax-bank-let-the-negotiations-begin" target="_blank" data-smartkarma-citation="insights:48944" rel="noopener">Norwegian Finans Holding - Nordax Bank: Let the Negotiations Begin</a>, the 4 March announcement has led to an <a href="https://mb.cision.com/Main/7708/3339233/1411921.pdf" target="_blank" rel="noopener">improved offer</a>, just above my TP (NOK 100/share with no dividend adjustment vs. NOK 103 cum dividend), after Norwegian Finans Holding (NOFI) rejected Nordax's initial bid.
<ul>
<li>The improved offer is subject to a 90% acceptance threshold, but Nordax could lower the threshold to two-thirds of 's shares.</li>
<li>NOFI said it will now grant Nordax access to a confirmatory due diligence process.</li>
</ul>
In rejecting the initial offer, Norwegian Finans Holding said the proposal was not in the best interest of its shareholders and that the initial price significantly undervalued the company. Nordax subsequently said it was not pursuing the initial offer, but noted that it was evaluating all options.
The new indicative offer represents an improvement of 11.1% vs. the 4 March offer, and a premium of 30.6% to the undisturbed share price on 3 March 2021 and 49.8% to the 6-month VWAP. It also represents 10.8x P/Fwd E (above the 3-year average of 7.8x), 1.7x P/Fwd BV (same level as the 3-year average of 1.7x P/BV).
On 4 May, the share price increased by c. 10% vs. the previous close. Gross spread to the revised indicative offer is 1.5% (closing should happen at the beginning of Q3).
Median implied valuation (across different multiples) is NOK 109 per share, which reflects better prospects and economic recovery (management was upbeat during Q1 results presentation).
Recommendation is long NOFI, TP NOK 100/share. With the possibility of further upside as I do not rule out completely that the Board succeeds to extract a higher offer, up to NOK 109.

As mentioned in my previous insight Norwegian Finans Holding - Nordax Bank: Let the Negotiations Begin, the 4 March announcement has led to an improved offer, just above my TP (NOK 100/share with no dividend adjustment vs. NOK 103 cum dividend), after Norwegian Finans Holding (NOFI) rejected Nordax's initial bid.

The improved offer is subject to a 90% acceptance threshold, but Nordax could lower the threshold to two-thirds of 's shares.
NOFI said it will now grant Nordax access to a confirmatory due diligence process.

In rejecting the initial offer, Norwegian Finans Holding said the proposal was not in the best interest of its shareholders and that the initial price significantly undervalued the company. Nordax subsequently said it was not pursuing the initial offer, but noted that it was evaluating all options.
The new indicative offer represents an improvement of 11.1% vs. the 4 March offer, and a premium of 30.6% to the undisturbed share price on 3 March 2021 and 49.8% to the 6-month VWAP. It also represents 10.8x P/Fwd E (above the 3-year average of 7.8x), 1.7x P/Fwd BV (same level as the 3-year average of 1.7x P/BV).
On 4 May, the share price increased by c. 10% vs. the previous close. Gross spread to the revised indicative offer is 1.5% (closing should happen at the beginning of Q3).
Median implied valuation (across different multiples) is NOK 109 per share, which reflects better prospects and economic recovery (management was upbeat during Q1 results presentation).
Recommendation is long NOFI, TP NOK 100/share. With the possibility of further upside as I do not rule out completely that the Board succeeds to extract a higher offer, up to NOK 109.

Nordax Bank Sweetens Its Bid for Norwegian Finans